Sebi Abolishes Mutual Fund Distributor Transaction Charges

Sebi, the markets regulator, has abolished transaction charges for mutual fund distributors. This decision, effective immediately, follows public and industry consultations. Earlier, distributors were eligible for charges if they brought in minimum subscriptions over Rs 10,000. The change aims to simplify remuneration of distributors, enhancing transparency.

The Securities and Exchange Board of India (Sebi), the markets watchdog, has decided to eliminate transaction charges that were previously payable to mutual fund distributors. This move marks the end of the existing practice where asset management companies (AMCs) could pay these charges for investments that exceeded specified limits.

This decision follows a structured process of public consultation held in May 2023, and an industry-wide consultation that took place in June. Under the earlier regulation, distributors could earn transaction charges if they secured a minimum subscription amount of Rs 10,000.

Sebi's latest circular highlights that AMCs should no longer provide these transaction charges to distributors, standardizing the compensation framework. This measure is expected to streamline distributor payments and ensure greater transparency within the mutual fund sector.

(With inputs from agencies.)